Following the flurry of interest and subsequent spending on digital transformation in Australian enterprises, it now appears the nation is in a state of digital fatigue, with executives increasingly distracted by other business priorities.
According to Gartner vice-president and research director, Andrew Rowsell-Jones, interest in the transformative journey is dwindling, akin to other industry disruptions where pundits overestimate the impact in the short-term and underestimate the impact in the long-term.
“Digital transformation is following this pattern,” he said. “This is the most dangerous time as there’s temptation for organisations to just ignore it and go back to what they were doing before.
"The effects of digital are now just beginning to be felt, so they have to stick with it – it’s a multi-year journey.”
In stating that most Australian businesses remain in the early experimental phase, Rowsell-Jones said a reason behind the lethargic interest is the difficulty to find larger businesses in Australia that are making revolutionary moves in the digital space.
“Australia is very innovative where it has scale in sectors such as health, mining and agriculture, yet in other sectors the markets are small, which makes innovation difficult,” he said.
However, because Australia’s economic environment is big enough for businesses to be successful whilst working alongside competitors, Rowsell-Jones said he finds it rational that Australian businesses look to simply improve the services it provides, rather than totally disrupting the service and business model.
“What digitalisation looked like it was going to do was to disrupt that, but now boards are figuring out that it isn’t and that they can control competition here in Australia," he said.
"If you can do that, then you will innovate in a much slower way, which is fine until someone comes along and steals your market.”
Comparatively, Rowsell-Jones pointed to overseas markets such as the US, where companies like General Electric (GE) see digital as fundamentally transformational and have altered business models accordingly.
“They’ve shifted their models from focusing on selling product towards becoming information analytics businesses, where cloud-based analytics and productivity enhancing capabilities are creating non-price competition,” he said.
“As a supplier, it’s about seeking non-price competition and differentiating your product and the ecosystems around it. I don’t see a lot of that happening in Australia.”
For businesses to continue along the digital journey successfully, Rowsell-Jones said a particular new set of skills is required for the CIO in the new IT environment, as the industry moves from away from an IT-centric model towards a digitised, business-centric model.
“The idea of the CIO being a technical person, or a person with a generic set of skills, is a thing of the past. The old notion that a business strategy drives an IT strategy and the IT strategy enables the business strategy is a virtuous cycle,” he said.
“If you were entirely dependent on the CMO to drive the digital strategy then that is only half the cycle. To complete the circle, the IT organisation and especially the CIO, must understand a lot more about the market and the customer experience than they’ve ever done before.”